As the third quarter of 2024 approaches, the insurance industry in China finds itself in a transformative phase, marked by the latest reports on solvency from various companies. The data reveals a noteworthy trend: over 40% of property insurance firms have experienced a sequential increase in their core solvency ratios, fundamental to their ongoing operations. Among these companies, one stands out: the Zhonghui Property Mutual Insurance Society, which has achieved a remarkable solvency ratio of 225.8%. Founded as the nation’s first mutual insurance institution, it reflects the potential and competitive edge that mutual insurance can offer within the evolving landscape of the insurance market.

The shift in China’s insurance landscape from a growth-driven to a competition-oriented market phase has led consumers to seek not just basic coverage, but tailored and inclusive insurance products. The concept of mutual insurance, which emphasizes the principles of shared risk and collective support, aligns perfectly with this demand. Mutual insurance organizations inherently offer a model that promotes cooperation among policyholders, creating a community-driven approach to risk management. This paradigm is gaining traction, especially as consumers increasingly prioritize accessibility and personalization in their insurance needs.

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To bolster an inclusive insurance system, it is vital to expand the reach and quality of base insurance services. The focus should be on broadening the geographical, demographic, and sectoral coverage to ensure that insurance offerings are equitable, affordable, and effective. Notably, vulnerable groups such as farmers and low-income urban residents must be prioritized to meet their specific insurance requirements. By focusing on these segments, the insurance industry can play a crucial role in improving financial resilience among populations that historically have been underserved.

The development of mutual insurance in China took off in 2016, with the establishment of pivotal organizations, including Zhonghui Property and the Huifeng Property Mutual Insurance Society. Since then, the sector has expanded, and currently boasts five licensed mutual insurance entities. The growth of mutual insurance exemplifies the innovative spirit within China’s financial services, reflecting both adaptability and a response to market demands. Over the past eight years, it has shown remarkable viability and competitiveness, even in a landscape dominated by traditional insurance models.

According to Li Jing, the chairwoman of Zhonghui Property Mutual Insurance, the concept of mutual insurance is still relatively new in China, but it possesses significant promise. The unique attributes of mutual insurance include providing a focus on user value and consumer rights—an essential consideration in an age where demographic dividends are diminishing. This consumer-centric approach strengthens the inclusivity of insurance, facilitating the development of a professional, diversified, and high-quality insurance market.

Central to Zhonghui's vision is health insurance, making up an astonishing 97% of its business, with products targeting individuals with chronic illnesses. Innovations such as “Kidney Love Insurance” offer coverage for those with pre-existing conditions, making significant strides in addressing market shortcomings. Furthermore, through the development of low-premium and high-coverage insurance plans tailored for new citizens, the elderly, and individuals with chronic diseases, Zhonghui is carving out a niche in the rapidly diversifying insurance landscape. Their pioneering offering in Shenzhen, known as “Shenzhen Zhonghui Bao," leverages a membership-sharing mechanism aimed at providing efficient coverage to workers within the new economy—a testament to its market adaptability.

Li Jing emphasizes that mutual insurance operates under the core principle of inclusive finance, honing in on specialized sectors to fulfill unmet needs. By targeting high-risk and low coverage groups, Zhonghui aims to deliver substantial protective measures that cater specifically to these populations, furthering the mission of equitable access to insurance services.

Moreover, embracing the “Internet Plus” development strategy, Zhonghui has adeptly utilized cutting-edge technologies such as big data, cloud computing, and mobile internet to fuse mutual insurance with the digital realm. This integration not only expands the frontiers of insurance services but also positions Zhonghui at the forefront of the digital financial revolution, making substantial strides in enhancing user experiences.

In addition to Zhonghui, other mutual insurance companies like Huifeng and Xinmei Life Mutual Insurance have also begun to realize profits and cement their presence in the market. Xinmei Life has particularly focused on the 'big health' market and achieved remarkable success through digital transformation, significantly enhancing its operational efficiency and customer service quality, resulting in a staggering 273% increase in premium income in the first half of this year alone.

Yang Fan, chairman of Xinmei Life Mutual Insurance, notes that the ethos of mutual insurance aligns seamlessly with the spirit of collaboration and sharing inherent in the digital age. This alignment allows insurance companies to transcend traditional industry barriers, lowering service entry points, and extending their reach to underserved demographics, fostering innovative solutions and further progress in inclusive finance.

Reflecting on the broader picture, Li Jing believes that while mutual insurance still holds a small market share in China, its foundational mechanism fosters a mutual-win environment, granting the ability to meet specific insurance needs for diverse groups effectively. By leveraging these unique strengths and pathways, mutual insurance is not only charting new courses for the industry but also catalyzing broader financial inclusivity across the nation's economic landscape.